February 7, 2007
CBOT Corn Outlook on Wednesday: Seen up 1-2 cents; following overnight theme
Chicago Board of Trade corn futures are seen starting Wednesday's day session with modest gains, with higher overnight indicators serving as the influence for the opening calls.
Analysts expect corn to open 1 to 2 cents higher.
In overnight electronic trading, March corn ended 1 3/4-cents higher at US$3.98 1/4, May corn finished 1 1/4-cents higher at US$4.10, and December corn was 1 3/4-cents higher at US$3.93 1/4.
A quiet news front will keep technical factors in play once again, with traders looking to even up a few positions ahead of Friday's supply and demand report in the event of any surprises from the U.S. Department of Agriculture, analysts said.
Nevertheless, traders are only looking for some fine tuning to the corn balance sheet in the report. Meanwhile, mild support is expected from higher crude oil futures in early trade, with frigid central U.S. weather aiding the firm tone on talk of increased livestock feedings and slow grain transportation.
Technical factors are seen as key, with the market continuing to test key support levels at the bottom of the market's nearly one-month trading range, analysts said. The market continues to find scale down commercial buying beneath the market, but a lack of fresh news fails to support buying ideas, analysts added.
A technical analyst said recent price action has formed a downtrend channel on the daily bar chart, but the corn bulls still have the near-term technical advantage. Market bulls would gain better upside technical momentum by producing a close above chart resistance at last week's high of US$4.09 1/4 basis March futures. The next downside price objective is producing a close below solid chart support at US$3.92.
First resistance for March corn is seen at US$4.00 and then at Tuesday's high of US$4.02 1/2. First support is seen at last week's low of US$3.95 and then at US$3.92.
The USDA will release its updated supply and demand projections Friday at 8:30 a.m. EST (1330 GMT). The average of trade estimates from analysts surveyed by Dow Jones Newswire peg U.S. corn ending stocks at 762 million bushels, up 10 million from January's estimate. The range of estimates span from 702 million bushels to 852 million bushels.
U.S. Midwest cash corn basis bids were mostly steady Wednesday, cash traders said. Spot U.S. cash corn bids were up 5 cents in Cedar Rapids, IA., up 5 cents in Peoria, Ill, and up 2 cents in St. Louis, MO.
The DTN Meteorlogix weather forecast said the US and European models are in fair to good agreement for about 4 or 5 days, only fair agreement during days 6-10. The European model has a new, cold, air mass over the northern plains Monday and over the western Midwest Tuesday. The US model has a much weaker high further north and east during this time. The European model would be drier and colder for the Midwest during this period. The US model would be cool to cold but with some chance for precipitation.
In Argentina, the best chance for scattered thunderstorms still appears to be the period from Sunday night and Monday into Tuesday. Wednesday's charts feature a better chance for widespread thunderstorms than Tuesday's charts but not as good as Monday's information.
In other news, Belarus will this year reduce its sugar beet planted area, replacing beet with corn, because the country's refining industry cannot cope with the large harvest, according to the Agriculture Ministry's press service.
China's cash corn prices in major producing regions were slightly lower in the week ended Wednesday, as supply increased while demand thinned. Corn processing plants face tight cash flow because they had purchased too much earlier, while farmers are keen to release their stocks ahead of the commencement of spring plowing at the end of March, analysts said.
In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled mixed, with pressure coming from sluggish cash prices. The September contract rose RMB1 to RMB1,714/tonne.
